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My Thoughts On Tesla's Stock Price

Updated: Jan 21, 2018

At the beginning of May, some of the greatest money managers get together at the Ira Sohn Investment Conference at the Lincoln Center in New York City.  Some take the stage and share what investment they think will give investors the greatest return over a one year time period, and many others patiently sit in the audience and wait to hear what the presenters have to say.  

There have been some ideas at this conference in the past that have moved the markets as the presenter is giving his speech, so Wall Street pays some close attention to the conference as it is going on.  One idea that got some movement this year was Bill Ackman's pitch on Howard Hughes.  I remember the stock being slightly down before he got on stage, and then it was up around 3% by the time he got off.

The conference also hosts an investment contest where almost anyone can submit their own stock idea for some of the best fund managers like Bill Ackman, David Einhorn, Joel Greenblatt, Seth Klarman, and Larry Robbins to read.  The winner receives a ticket to go to the conference, along with a guest of their choosing, and takes the stage to pitch their idea to the audience.

I searched for a while this year, but I struggled to find an idea that I had a lot of conviction in to give investors a good return.  I eventually stumbled across Tesla which has already been in the spotlight among the investment community because of its high profile CEO, Elon Musk, and its electric cars, which are believed to soon revolutionize the auto market.  The timing of when they will actually revolutionize the auto market varies among most, but judging from the position I recommend in my paper at the bottom of this page, you can get a little bit of an idea on where I stand on the timing.

After doing some research, I concluded that this stock is one of those over hyped growth stocks that come along at the end of every single market cycle.  The market's euphoria takes over and forgets about fundamentals, so I decided to issue a short recommendation on my report, back it up with research, my analysis, and then submit it to the contest.  Interestingly, a day or two after I submitted my idea to the conference, it became public that one of the judges himself, David Einhorn, already had a short position in the stock.

At first, I thought that this might give my idea a huge tailwind to be selected as a finalist or semi-finalist, since if one of the judges already had a short position in the stock, then that most likely means that he agrees with my thesis and it could help my idea be selected.  My opposing thought was that the judge may not want to make it look to the media that he was "talking his own book".  Talking his own book essentially means that they already own the stock, and are "talking" about it or promoting it publicly for the sole reason to make money off of their marketing.

Mostly just overthinking on my part, but in the end, my idea wasn't selected as the winner but I posted it below for you to read.  I originally created PowerPoint slides to add to the report as a shorter version for the judges to read, in addition to the Word file that I submitted, but I wasn't able to submit both of them because PDF files weren't allowed.

I posted both below though, so there are no constraints here. You can read both the written version starting on page 1 to page 4, and/or the PowerPoint version starting on page 5.

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